Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) Q2 2022 Earnings Conference Call August 9, 2022 4:30 PM ET
Company Participants
Julie Rathbun – Investor Relations
Jonathan Drachman – Chief Executive Officer
Priti Patel – Chief Medical Officer
Sean Smith – Vice President, Finance
Conference Call Participants
Mary Kate – Bank of America
Charles Zhu – Guggenheim Securities
Ben Burnett – Stifel
Mara Goldstein – Mizuho Securities
Operator
Good afternoon and thank you for joining us today for the Neoleukin Therapeutics Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to turn the call over to Julie Rathbun, Communications for Neoleukin Therapeutics. Julie, please go ahead.
Julie Rathbun
Thank you. Good afternoon, and welcome to Neoleukin Therapeutics second quarter 2022 conference call. Joining me on the call today from Neoleukin are Jonathan Drachman, CEO; and Priti Patel, Chief Medical Officer; and Sean Smith, Vice President, Finance. Today’s call is being recorded. It will be available for replay on the Investor Relations section of the Neoleukin website approximately 2 hours after the call for at least 30 days.
Before we start, I’d like to remind you that today’s call will include forward-looking statements based on current expectations. Such statements represent management’s judgments, intentions, beliefs and expectations about future events, strategies, product candidates and operating plans. All forward-looking statements included in this presentation are made as of today and involve assumptions, risks and uncertainties, and actual results could differ materially from those anticipated in the forward-looking statements. Neoleukin undertakes no obligation to update or revise any forward-looking statements. Please refer to the company’s filings with the SEC, which are available from the SEC or on the Neoleukin website information concerning the risk factors that could affect the company.
I’d now like to turn the call over to Jonathan Drachman.
Jonathan Drachman
Thank you, Julie and good afternoon. Neoleukin was founded in 2018 based on the vision that de novo protein design will become an important way to design new biologic therapies with customized properties, making them more suited to be therapeutics than native proteins. In the past 3.5 years, we have continued to push the boundaries of de novo protein design, learning how to extend pharmacodynamic half-life, fine tune the affinity of the ligand for its cognate receptor, target the cytokine mimetic to specific cells and how to design increasingly complex molecules.
NL-201 is the first molecule in this new class of potential therapeutics, and we believe it is the first fully de novo protein to enter clinical testing. Through the ongoing Phase 1 clinical trial, we expect to learn a tremendous amount about the biological effects of de novo proteins in patients and how to continue expanding the capabilities of our technology. In addition to NL-201, we have other examples of our de novo protein design capabilities. In 2020, we announced the de novo protein that could prevent SARs-CoV2 from entering human cells. In 2021, we presented data on an IL-2, IL-15 antagonist that could inhibit IL-2-induced proliferation and protect mice from graft versus host disease. And we have more recently announced that we are working on a T regulatory cell agonist with the goal of treating patients with autoimmune or inflammatory diseases.
Now we are entering the next phase of de novo protein design technology, which involves adding machine learning and neural networks to computational methods in order to develop new molecules. We have a team of scientists who have been working on this, and we believe it offers advantages for the development of de novo protein therapeutics. Design methods leveraging machine learning can go faster, require less computational power, create designs for more complex proteins and don’t require high-resolution crystal structures as a starting point. Over the last 6 months, we have used this technology to develop prototypes for two additional de novo cytokine mimetics. These proteins have established mechanisms of action that we believe could make them promising anti-tumor candidates, and the native proteins have more complex structures than those we have previously designed mimetics for. We believe this is the future of de novo protein design, and we’re very excited about entering into this next phase with our growing research pipeline.
I’d now like to turn the call over to Priti Patel, our Chief Medical Officer, for an update on NL-201. Priti?
Priti Patel
Thank you, Jonathan. I’m pleased to share an update on our clinical development program. As a reminder, NL-201 is a de novo protein that stimulates both the IL-2 and IL-15 receptors. It is more potent than native IL-2 and preferentially stimulates naive CD8 T-cells and NK cells versus immunosuppressive key regulatory cells at low concentration. The first-in-human clinical trial of ML-201 is being conducted in patients with relapsed or refractory solid tumors. The open-label Phase 1 trial of ML-201 is currently active at 12 sites in the United States, Australia and Canada.
Our NL-201 clinical trial is progressing well with strong investigator engagement across our clinical sites and active enrollment. We are currently in the dose escalation phase and are exploring two dose schedules in order to assess safety, pharmacokinetics, pharmacodynamics and anti-tumor activity. The trial is evaluating two different schedules and multiple dose levels in order to determine a recommended Phase 2 dosing schedule. We have added intermediate dose levels to the clinical plan as we have progressed through dose escalation, which has extended the time line to reach a recommended Phase 2 dose and schedule. Due to the addition of these intermediate doses, we now expect to release our interim data on this clinical trial in 2023.
After a recommended Phase 2 dosing schedule is identified through our dose escalation study, we plan to initiate enrollment of indication-specific expansion cohorts, including patients with renal cell carcinoma and melanoma. Earlier this year, we started the combination portion of our Phase 1 clinical trial with the addition of pembrolizumab to NL-201 in specific cohorts. Patients with relapsed or refractory solid tumors in these combination cohorts received a standard dose of pembrolizumab combined with ascending doses of NL-201 in order to define a recommended dosing schedule for the combination regimen. The NL-201 pembrolizumab combination will be tested as a separate arm of the ongoing Phase 1 trial.
With that, I’d now like to turn the call over to Sean Smith, VP of Finance, to discuss our second quarter 2022 financials. Sean?
Sean Smith
Thanks, Priti and good afternoon, everyone. I’m pleased to present you with our second quarter financial results. Cash, cash equivalents and short-term investments totaled $116.5 million as of June 30, 2022, compared to $142.5 million as of December 31, 2021. Research and development expenses for the second quarter of 2022 increased to $11 million from $9.8 million for the second quarter of 2021. The increase was primarily due to increased clinical trial expense related to NL-201.
General and administrative expenses for the second quarter of 2022 decreased to $4.9 million from $5.3 million for the second quarter of 2021. The decrease was primarily attributable to decreases in personnel-related and facility-related costs. Net loss for the second quarter of 2022 was $15.7 million compared to a net loss of $15.1 million in the second quarter of 2021. Based upon current internal infrastructure and pipeline initiatives, we believe our cash and short-term investments will be sufficient to fund operations through 2023.
Importantly, we are also evaluating opportunities to extend our runway by gaining certain activities and have slowed down growth due to the challenging capital markets. We remain focused on our core value-driving activities and feel confident that the amount of cash we have will enable important milestones over the next 1.5 years.
And with that, I’ll turn the call back over to Jonathan for some concluding comments.
Jonathan Drachman
Thanks, Sean. We are looking forward to the coming months as we progress NL-201 through dose escalation and gather information to help guide optimal dosing and schedule based on tolerability, pharmacokinetics and pharmacodynamics. We look forward to learning more about our lead molecule, while also continuing our efforts to expand the potential offered by de novo protein design. We are thankful for our dedicated team at Neoleukin that remains diligently focused on our goal to advance new therapeutics to improve outcomes for patients with serious diseases.
Operator, we can now open the call up for questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] And we will first go to Greg Harrison of Bank of America.
Mary Kate
Hi, there. Good afternoon. This is Mary Kate on for Greg. Thanks for taking our questions. Maybe could you ask some additional color to your expectations for the NL-201 update? Maybe what should we expect to see in the initial data update? And how has this changed at all with the addition of the intermediate doses? Thank you.
Jonathan Drachman
Sure. I’ll start, and then I’ll ask Priti to elaborate. We – I don’t believe that the addition of intermediate doses will change anything in terms of what we will be presenting next year, and you should expect to see a data set that will include safety, tolerability, biomarker data, pharmacokinetics and any anecdotal anti-tumor activity that comes from the clinical trial. Priti, anything you would like to add to that?
Priti Patel
No. I think that covers it.
Mary Kate
Great. Thank you.
Operator
Our next question will come from Charles Zhu of Guggenheim Securities.
Charles Zhu
Hi, guys. Thanks for taking my questions. I had another question on the intermediate dose cohorts that you’ve announced. I’m kind of wondering if you could provide some additional color as to what exactly that means. For example, have you dosed escalated up to a certain level and then now you are coming back down, or are these additional intermediate doses kind of like further steps up as you continue to go upwards in escalation? And then how should we think about the additional number of doses that you may evaluate? Thanks.
Jonathan Drachman
Thanks for the question, Charles. So, with any clinical trial, there are adjustments that are made during the course of it. And during the trial, we felt that in order to best and fully evaluate both safety and activity, it was best to add intermediate dose levels to our planned dose levels, and we continue dose escalation. So, there is no de-escalation going on.
Charles Zhu
Got it. Okay. And then how are you thinking about – are you able to, for example, refine timing within 2023, or we should still think about sometime within that full year of 2022 for your initial data?
Jonathan Drachman
At this time, we are going to leave it at 2023, and we will definitely update you as time goes on.
Charles Zhu
Alright. Fully understand. Thanks for taking the questions.
Jonathan Drachman
Sure.
Operator
We will now move to a question from Ben Burnett of Stifel.
Ben Burnett
Hi. Thank you very much. I wanted to also ask a question around just the dose scheduling and the new cohorts. But I guess first, regarding the two schedules, schedules A and B, I guess do you feel confident at this point that these are the right schedules or is there an appetite to maybe look at further additional schedules beyond that?
Jonathan Drachman
Well, whenever you are working with an agonist, I think that getting the interval right is a very important part of how you develop a drug because the pharmacodynamic activity is – can often be much longer than the pharmacokinetic half-life. Based on extensive preclinical work that we did, we feel like these are the right schedules. And at this point, we continue with the original plans to look at day one and eight schedule as well as the day one schedule for three-week intervals.
Ben Burnett
Okay. Excellent. And is there anything you can comment on regarding safety? And have you seen any DLTs at this point?
Jonathan Drachman
We really can’t comment on that at this point, but we look forward to providing a full update next year.
Ben Burnett
Okay. Understood. And maybe if I could just ask one more. Just regarding your comments around some of the T-reg pursuits, I know it’s early, but do you have a sense for which autoimmune disorders would maybe suffer from poor functioning T-regs that might represent low-hanging fruit in this setting?
Jonathan Drachman
We do have some ideas about areas that are interesting to pursue. But again, we are not prepared to discuss that at this time. I think there is a lot of opportunities, though, for expanded T regulatory cells to have an impact in both inflammatory and autoimmune conditions.
Ben Burnett
Got it. Okay. Alright. Thank you very much.
Operator
[Operator Instructions] We will now go to Mara Goldstein of Mizuho Securities.
Mara Goldstein
Great. Thanks. I just wanted to ask also about the intermediate dose if, a, that is being incorporated into the combination arm and as well as just trying to understand, there is no discussion of hematology study and whether or not that is still in the works also at this dosing schedule?
Jonathan Drachman
Yes. Thanks for the question, Mara. The – what we learn from the solid tumor monotherapy dosing will be used to guide the dosing for other studies in the future as well as for the combination with pembrolizumab since that was started later and is earlier in dose escalation. As far as the hematology study goes, as we announced last quarter, we have decided to wait on initiating that trial until we have learned more about the dosing schedule from the ongoing solid tumor trial. It’s still something that we are interested in and have seen good activity pre-clinically across lymphoma and multiple myeloma, and we have presented those data previously. So, that remains an interest. But rather than doing the same thing in terms of dose escalation and dose finding across a second Phase 1 study, decided to wait until we learn more from this ongoing study.
Mara Goldstein
Okay. Thank you.
Operator
And as there are no further questions, I would like to turn the call back to Jonathan Drachman for closing remarks.
Jonathan Drachman
Alright. Thanks everyone for joining our call today. We look forward to sharing our progress with you in the months ahead. Thank you.
Operator
And with that everyone that does conclude today’s conference call. We would like to thank you again for your participation. You may now disconnect.
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